NEW YORK (AP) — Venezuela’s oil industry has been in the spotlight since President Donald Trump used military force to capture the country’s leader, President Nicolas Maduro.
In the days that followed, Trump said the U.S. would run Venezuela and tap its oil reserves. He said Venezuela stole U.S. oil, a reference to former Venezuelan President Hugo Chavez’s move decades ago to nationalize hundreds of foreign-owned assets, including those owned by American oil companies.
Trump floated a plan for those companies to return and rebuild Venezuela’s beleaguered oil industry. He later announced Venezuela would provide 30 to 50 million barrels of oil to the U.S., and Venezuelan state-owned oil company PDVSA said it is negotiations with the U.S. government for the sale of crude oil.
The administration also “selectively” removed sanctions to enable the shipping and sale of Venezuelan oil to markets worldwide, saying the proceeds would settle in U.S.-controlled accounts and be disbursed to the American and Venezuelan populations, according to the Energy Department.
The moves may be part of a long-term strategy to gain a foothold in a nation with vast oil reserves.
Interest in Venezuela’s vast oil reserves
Venezuela has one of the largest oil reserves in the world, and some energy analysts predict there won’t be enough oil to meet global demand in coming years.
The South American nation has an estimated 303 billion barrels of crude oil in the ground, which is about 17% of the world’s supply, according to the U.S. Energy Information Administration. Unlike other parts of the world, where geologists have to search for untapped oil, the reserves under Venezuela’s soil are largely mapped and known, experts say. But because of dilapidated infrastructure, the country only produces about 1% of the world’s oil.
“Venezuela has enormous reserves,” said Claudio Galimberti, global market analysis director and chief economist at Rystad Energy. “If you ask any oil company around the world, go to their exploration team, their geologists, and ask them where is oil going to come from in the 2030’s and 2040’s, their answer is a rather scary, ‘We don’t know.’ So there is going to be a problem of finding oil in the next few years.”
In the short term, the global supply of oil exceeds demand, so increased production from Venezuela isn’t critically needed. But the International Energy Agency estimates that under current policies approximately 25 million barrels per day of new oil supply projects will be needed by 2035 to keep markets in balance.
